Japan’s Mom-and-Pop Investors Join Bull Run

As the Bank of Japan’s mammoth monetary easing program lifts Japanese share prices to multiyear highs, it’s not just the foreign investors flooding into the markets. After lying low for decades or shunning investment altogether, Japan’s mom-and-pop investors are roaring back to life.

Bloomberg News

The stock surge is attracting Japan’s long-absent retail investors.

Here’s a look at what the various retail investors are doing to ride the bull market: those coming back to the market after having gotten burned in earlier bubbles; first-time investors; and those who remain skeptical, or at least cautious.

COMING BACK:

*Hiroki Nakayama, 54

The shares of five Japanese companies Hiroki Nakayama bought in the mid-1980s slept in his brokerage account through the collapse of the economic bubble and later the burst of the dot-com bubble in the early 2000s. “I was busy at work so I didn’t notice shares going up or down,” Mr. Nakayama, a 54-year-old former system engineer, said.

But last year, he hired a financial adviser to better manage his assets after he left his job in 2011 to take care of his sick mother and father who suffered from Alzheimer’s. In August, he then enrolled himself in a Tokyo-based school called Kabu Gakko 123 (Stock School 123) to learn how to read stock charts to do swing trading, a strategy of holding onto stocks only for a few days. Bolstered by a bull market, he slowly started testing various trading techniques he learned at school and increased the number of trades from this year. With monthly spending of about Y3 million, he traded 17 stocks in December and traded on 40 companies in February and March. His invested money increased 17% in March, compared to just 3% in December. “Having experienced the bubble, I think that was the peak. But I think the Nikkei Stock Average still has a long way to go,” Mr. Nakayama said.

Among his “lucky trades,” Mr. Nakayama bought 100 shares of Fast Retailing Co. for Y30,950 on April 1 and placed an order to sell the stock at Y37,000 on Friday. “I’m starting to feel excited and restless,” Mr. Nakayama said as he watched the post-BOJ share surge.

*Junko Yoshida, 72

The growing interest by average investors in Prime Minister Shinzo Abe’s economic policies — dubbed Abenomics — were on full display at a recent seminar in Tokyo hosted by Japan’s second-largest brokerage Daiwa Securities Group Inc. More than 400 retail investors came to hear a speech by Yale economist Koichi Hamada, one of Mr. Abe’s key advisers.

The spacious hall was packed to such an extent that some desks were pulled out to make space for more chairs. Showered with an applause lasting more than 10 seconds, 77-year-old Mr. Hamada hobbled onto the stage, saying he’s feeling nervous speaking in front of such a large audience. “I don’t think I even need to say today that Abenomics will work,” he said, adding the key to rising shares is creating the expectation that aggressive monetary action will be taken and inflation can be achieved

Among the participants, Junko Yoshida, a 72-year-old pensioner who doesn’t have a Daiwa account, said she found out about the seminar in a newspaper ad and called three Daiwa branches before she could secure her spot. Ms. Yoshida, who previously bought mutual funds investing in foreign currencies, is now studying up on the basics of trading as she looks for investments at home and abroad to finance her spending on overseas leisure travel. In her stock portfolio, she currently owns the shares of convenience store operator Lawson Inc.Mitsubishi Heavy Industries Ltd. and Japanese airline ANA Holdings Inc.

“I’m busily attending free seminars,” Ms. Yoshida said. “In one seminar, I recently learned not to buy what brokers recommended and to study on my own.”

NEWCOMERS:

*Takahashi, 33

Told by his parents that stocks are “dangerous,” a 33-year-old employee at a Japanese telecommunications firm, said he had never considered any other option than putting his money in a bank account. (Citing privacy concerns, he only provided JRT his last name, Takahashi). But his fear for stocks receded slightly when he realized at an industry seminar in January that it might not be so hard to find growth stocks in the sector that he worked for. “That’s when I decided to buy stocks,” Mr. Takahashi said, adding the bull market also “provided a strong boost” to his decision to try stocks.

On Jan. 28, he opened an account at Japanese online brokerage kabu.com Securities Co. and used Y1.45 million from his savings on Feb. 1 to buy 2,500 shares of Internet service provider SAKURA Internet Inc. at Y580. On Feb. 20, he sold them at Y581 after becoming afraid that shares will fall. Despite his fears, the stock rose 11% by the following week.

After his semi-bitter first experience, he later bought 10,000 shares of Usen Corp., a provider of music broadcasting services, for Y155 on Jan. 22 and sold them three days later, pocketing a gain of Y20,000. He repeated similar quick trades three more times before becoming confident enough to buy 10,160 shares of Usen for Y172 on March 8. Having used up almost all his savings, he’s now sitting on a potential loss of nearly Y300,000 with shares having fallen 17% since then.

“I bought stocks thinking that I would make profit immediately but the reality is different,” said Mr. Takahashi. Still, he’s already thinking of buying shares in another Internet service provider when he finds a chance to sell his Usen holding. While he’s happy with his current income, he says he wants extra money to live in a bigger apartment where he hopes to start a share house with foreigners staying in Japan.

SKEPTICAL AND CAUTIOUS:

*Kento Nakajima, 26

For many younger investors like Kento Nakajima who have only lived through deflation, it’s hard to believe asset prices will rise even if the BOJ vows to do “whatever it takes” to bolster the economy.

“I don’t have a very good image of the market since I’ve never experienced a strong economy,” said Mr. Nakajima, a 26-year-old employee at a Japanese trading house employee.

He says he has never bought stocks before, but the current rally did pique his interest enough to draw him to a recent study session on stocks.

“I’d like to enter the market, but I’m a slow starter,” Mr. Nakajima said, adding he’s worried about depending only on his work income as he prepares for big life events like marriage and having kids.

“But I haven’t thought about when exactly I’ll start” buying stocks, he added.

*Kaori Inamura, 28

Kaori Inamura discovered the risk of relying solely on her work income after she was laid off last summer. Since then, she’s been attending various seminars on how to invest in Japanese and overseas assets, mulling the best option to manage her financial assets.

Still, Ms. Inamura, who now works at a Korean firm, said she doesn’t buy Prime Minister Abe’s promise to revive Japan, adding she feels safer putting money in overseas accounts.

“I feel the risk of putting money in Japanese banks when the country itself is in a tenuous position,” she said.

“I’d like to open an overseas account by next year,” she added, saying she’s interested in putting her money in a mutual fund in Hong Kong where she expects to see more growth than Japan.

One reason for her skepticism is the memory of her grandfather struggling with stock investment. “I don’t know when he ever profited. I’ve only heard him say look what’s happened (to my stocks),” said Ms. Inamura, recounting how her grandfather always jotted down the stock prices on the back of a piece of paper.

For now, she works extra hours at work for higher pay to increase her savings. Once she has Y1 million in cash, she plans to invest overseas.

About Japan Real Time

Japan Real Time is a newsy, concise guide to what works, what doesn’t and why in the one-time poster child for Asian development, as it struggles to keep pace with faster-growing neighbors while competing with Europe for Michelin-rated restaurants. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, the site provides an inside track on business, politics and lifestyle in Japan as it comes to terms with being overtaken by China as the world’s second-biggest economy. You can contact the editors at japanrealtime@wsj.com